Hatta lets ministry ask for house approval over Newmont deal

Hatta lets ministry ask for house approval over Newmont deal

Hatta Rajasa. (ANTARA/Rosa Panggabean)

We support the central government`s intention to purchase the NNT divested share."
Jakarta (ANTARA News) - Chief Economic Minister Hatta Rajasa has agreed if the Finance Ministry is willing to ask for approval from the House on its plan to purchase seven percent of PT Newmont Nusa Tenggara (NNT) divested share.

"We support the central government`s intention to purchase the NNT divested share. The problem is that we are not allowed to use fund from the state budget. So we want to use funds from the Government Investment Center (PIP). However, this needs approval from the House of Representatives (DPR)," the minister said here on Monday.

Hatta said that the government was the first party which had the right to purchase the NNT seven percent divested share as regulated by Law No.4/2009 on mineral and coal mining.

"Those who have the rights to purchase the share are the central government, the regional government, state-owned firm (BUMN), regional government owned company (BUMD) and the private sector. The order-line is like that. We must be in order. If the central government is willing to purchase the share, please ask for the approval of the DPR," the coordinating minister for economic affairs said.

He said that if the DPR rejected the central government`s intention to purchase the share, then regional government had the right to purchase it. "If the DPR rejects it, it should be offered to the regional government, we should not directly offer it to BUMN because we should follow the procedure in order. After all, the regional government of West Nusa Tenggara (NTB) has nothing other than its plan to purchase it too," Hatta said.

Earlir, Finance Minister Chatib Basri said the government will ask for the House `s approval for the use of funds from the PIP for the purchase of seven percent of Newmonth`s divested shares.

"The government is seriously considering purchasing PT Newmont Nusatenggra (NNT)`s divested shares and thus will follow the Constitutional Court (MK)`s decision that has asked the government to deal it with the DPR," Chatib Basri said here on Friday.

Chatib assured that the government would follow the decision of the MK that it should first ask for approval from the House if it wanted to use a fund sourced from the state budget for the purchase of the Newmont divested shares.

He said that at the soonest the government would ask for the approval from the House when the members had ended the period of their recess in mid August 2013. "Now the DPR members are in recess period. For the time being, we extended the purchasing period of the Sales Purchase Agreement (SPA)," the finance minister said.

Chatib denied reports that the government`s desires to purchase the Newmont divested stake was against the idea of chief economic minister Hatta Rajasa who wanted the divested stake to be bought by the regional government or by a state-owned company.

"I do not have any differing opinion with Hatta`s. I only state that the finance ministry is considering (the purchasing) option seriously to buy Newmonth shares," he said.

He however refused to speculate whether the DPR would endorse the government`s plan to purchase the Newmont shares worth US$246.8 million using the PIP funds.

The divestment agreement has not yet been executed since it was signed in May 2011 because the audit results of the State Audit Board (BPK) suggested that the government should ask for the DPR approval before it could purchase the share.

The government then submitted a review on the matter to the MK. But the MK ruled that the government should ask for an approval from the House before it purchased the share of the mining firm.

The sale of seven percent of NNT`s shares is the last phase of the company`s divestment process, which was initially expected to conclude in 2010.

It is part of the 31 percent shares NNT has to divest. The transaction has been delayed many times due to an inconclusive debate on whether the Indonesian government needs to get the deal approved by the DPR.

Meanwhile, the local government of West Nusa Tenggara (NTB) has also been trying to acquire these shares.

Indonesian laws necessitate foreign companies in the mining sector to transfer 51 percent of their shares to the government or local companies after five years of commercial operation.

Based on these laws, NNT is obligated to gradually divest 31 percent of its stake to the government or local companies.

NNT has undergone several phases of divestment since 1996. 24 percent of its stake was divested by 2009 and the remaining seven percent was supposed to have been sold in the last phase in 2010.

In December 2010, the Indonesian government struck a deal with NNT for the purchase of the remaining seven percent stake through the Government Investment Center (PIP), without the approval of the House of Representatives (DPR).